What is a POS System and How Can It Transform Your Small Business

Managing operations with limited costs is a complex feat to tackle. Let our insightful list of top POS systems for small businesses help simplify your work in a cost-effective manner!

What is a POS system, and why is it essential for small businesses? A POS system is a key element for any modern company. This is where the business takes place - the orders are made, important information is captured, and even customer interactions take place on a different level. The decision to implement a comprehensive POS system enables you to increase productivity, reduce errors, and provide seamless transactions.

Let us imagine this situation: The customers do not spend excessive time in the checkout stand, the stock is adjusted right away, and all sales statistics and details are at your disposal. What is the result? You save time and money while getting all the necessary knowledge to run your business better.

Point of sale isn’t just a brick-and-mortar cash register; it is the backbone of smarter business management of a retail company. Every transaction ensures smooth trades, real-time data, and effortless scalability through modules regardless of whether they occur with a humble coffee shop or with a huge retail business. If you’ve been wondering what is POS and how it can transform your business, your search for the best POS system for small business ends here.

What is a POS System?

We will provide the answer to your question: what is a POS system, in a simple manner. A POS system is the software and hardware that allows you to conduct transactions and handle different facets of operation including sales, stock control as well as customer information. More plainly put, it refers to that particular spot where customers pay for their purchases. It may take place within a bricks-and-mortar store, on your smartphone, or by using an internet connection. This generates the question: What does POS mean in today’s business terminology?

In the past, this term initially referred to a place where transactions were made, typically at a cash register. On the other hand, present day POS systems comprise far more sophisticated tools. Their advanced features include inventory tracking in real time, comprehensive customer relationship management (CRM), insightful sales analysis, and tracking employee performance among others. Nowadays, POSs are beyond payment processing machines; they form part of efficient data driven systems.

Why Small Businesses Need a POS System

In relation to small businesses, POS systems basically do much more than handling transactions. Rather, they are like the brain of several processes happening within an organization. It allows sales, inventory control, customer management and analysis to be put together. Hence allowing entrepreneurs to run their operations smoothly with few errors as well while making timely decisions based on data. The system acts as a tool for increasing consistency and precision by providing information that helps in improving business performance and promoting expansion.

Additionally, POS systems simplify transactions by enabling services to accept a variety of payment methods. These payment options not only optimize the transaction process but also enhance customer experience by providing convenient, fast, and convenient payment options.

How a POS System Works

A POS (Point of Sale) system operates by seamlessly merging hardware with software to optimize business transactions, oversee inventory, and deliver a broad spectrum of additional capabilities. It serves as a powerful tool for streamlining operations. Here’s a breakdown of how a POS system functions for small businesses in 2024:

Initiating the Transaction

Whenever an individual wishes to make payment for anything that they have selected, this cashier either scans the items with a barcode reader or keys in product details manually into a computerized cash register. Then all necessary information is inputted by this software such as prices, amounts bought and discounts if any to ensure that transactions are made correctly and kept under record.

Processing the Payment

After scanning the goods, the cash register displays a message to the cashier asking for his or her choice of mode of payment. It can either be cash, credit card or mobile payment options such as Apple Pay and Google pay. Card readers and mobile terminals provide speedy, secure transactions while integrated payment solutions automatically synchronize all transaction data making it smooth and efficient.

Real-time Inventory Management

Instantaneously, inventory levels are adjusted in the POS system with every transaction. Thus, ensuring real-time accuracy. Due to its significance, this feature aids businesses in avoiding stock shortages, streamlining their re-stocking process and keeping a close eye on the demand for different items. Moreover, sophisticated systems can generate alerts when specific stock levels are lower than desired helping to preserve ideal managerial stock policy.

Generating Receipts

After receiving money for the payment, a receipt is almost immediately produced by the position. The receipt can be printed on the spot with the help of a printer which prints receipts or can as well be sent by the means of e-mail or SMS. This makes it easier for businesses to reduce their paper waste through e-mail or SMS.

Recording and Reporting

The POS system houses all transaction data very safely. Using this massive amount of information, comprehensive reports containing information related to sales trends, customer tastes and employee performance are produced. Different kinds of supplies’ level adjustments or assessments of sales patterns which change with seasons can make use of such reports that provide essential material for a person managing business in order to make informed decisions.

Optional Loyalty Programs

Multiple contemporary POS systems have embedded loyalty and rewards programs, thus businesses can easily observe customer buying trends. Through these systems businesses offer personalized incentives like discounts or even accumulation of points for future purchases. Such attributes not only increase client retention but also create strong relationships that lead to more frequent patronage hence improving general customer contentment.

How POS Systems Revolutionize Business Operations

POS (Point of Sale) systems revolutionize transaction management by seamlessly connecting hardware with sophisticated software to track sales, inventory, and customer information. During product scanning, the POS system instantly updates stock levels, processes payments, and issues receipts. Advanced POS platforms provide robust analytics, customer relationship management (CRM) tools, and mobile functionality. They enable businesses to monitor performance, improve inventory, and improve customer engagement. Such systems are essential to maintain operational efficiency in all retail, restaurant, and service industries.

Types of POS Systems for Small Businesses

Now that you know some of the best POS systems out there, we think you should know how to pick one. Before choosing a POS system, you must pick what type of system you wish to use for your business operations. There are quite a few options to choose from in the market. Let’s dive into the various types of POS systems available.

Desktop Point of Sale System

This is basically a computer with the POS system installed in it. It is fastened to the cash drawer and is highly customizable. You can access the internet for your operations and update the system when needed. Desktop POS systems need IT support and are good for large organizations.

Mobile Point of Sale System

All you need is a mobile phone to access this point of sale system. You need to download a POS app that offers the best features for your company. You can attach a card reader to your mobile phone to boost the checkout process. This online POS system is inexpensive and can help your business operate in no time. Even studies show that worldwide users of mobile POS payments are expected to reach 1.99 billion by 2028.

Tablet Point of Sale System

This type of POS system is very similar to the mobile POS system but it has some additional features. You can configure this tablet POS system to use in various circumstances. The tablet system comes with distinct external hardware, such as a barcode scanner or a permanent terminal. This system of POS for business also uses an app for running operations.

Self-Service Kiosks

This type of system can be found in retail stores and quick service stores. The self-service kiosks contain a tablet that customers use to add their order while waiting at the table or even at the front counter. You can save a fortune on employee costs if you use these self-service kiosks. This is one of the top POS systems that help improve the efficiency of your business to a great extent.

Multichannel Point of Sale System

You must know that both online and offline sales can be done using multichannel POS systems. The system can be integrated with your website and in-store hardware (desktop or tablet). You can take online orders without the need to pay for another POS system. Moreover, you can generate reports of your monthly sales using this POS system variant.

Cloud Point of Sale System

The Cloud POS system uses internet servers for its operations. You can access this POS software from anywhere, granting you flexibility in workplace management. If your business operates in multiple locations, we recommend that you use this POS system as it offers real-time data syncing. The Cloud POS system is the best choice for brands that are looking to scale their operations.

Open-Source Point of Sale System

If you are looking to grow your small business, then the open-source POS system can be an ideal pick. It is a custom software that runs on tablets or desktops. This type of POS system for small business is good for you if you want to add unique features to your operations. Additionally, open-source systems often ensure cost savings and flexibility, allowing you to adapt the software to fit your evolving business needs.

Also read: Best Business Intelligence Software to Grow Your Business in 2024

List of the Best POS Systems for Small Businesses to Explore

We’re sure that if you take some time out to explore the top POS systems for small businesses, you can ensure cost savings and better employee management. Even if you are a freelancer who just ventured into the business market, using point of sale systems for small business can boost your productivity to a large extent. You can allocate resources where they are most required for improving your brand image.

Also read: Best Apps for Small Business for Better Productivity and Efficiency in 2024

We have compiled a list of the 6 best POS systems that can take your business to new heights.

1. Toast: Best Small Business POS for Restaurants

First on our list is Toast. It is one of the best point of sale systems for small business owners that is used exclusively by the restaurant industry. It comes pre-built with many tools and features, such as managing delivery, inventory customization options, and online ordering facilities. You can use Toast for free initially and as your business grows, you can pay for more features.

This point of sale system is one of the top choices for the most popular restaurants in the world and that’s why it had to be on our list! Restaurant owners can easily track sales and manage the front portion, back portion, and also the customer front of their business. Toast is used by bars, food trucks, and even fine-dining establishments.

Standout Features:

• Inventory management
• Loyalty programs
• KDS (Kitchen display system)
• Tracking order delivery
• Digital menu cards

Pros vs Cons:

Subscription Cost:

The free version is available with limited services, while the basic subscription starts at $69 per month.

2. Square: Best POS for All Small Businesses

Square POS is one of the top options for small businesses due to its low prices. We might as well call it an inexpensive pos system for small business owners among the variety of options available in the market. You can generate reports, evaluate data, and even manage sales easily using this point of sale system. 

Freelancers and small business owners prefer Square POS because it's relatively easy to use and is packed with features. You need to use the in-house service of Square to process the payments. Artificial intelligence features are going to be rolled out soon for developing the websites of small business owners.

Standout Features:

• Contactless payment options
• Free card reader
• Vast variety of add-ons
• Accessible on both mobile and tablet
• Interface is customizable
• Offers local shipping and delivery

Pros vs Cons:

Subscription Cost:

The free version includes most of the features you require for retail management. If you can splurge some money towards the premium plans that start at $35 per month, you get added features.

3. Shopify: Best POS for Retail

Shopify often ranks the highest in the list of top POS systems for small business owners. More popular for its online shopping platform, Shopify offers one of the best POS options for small businesses with a focus on retail companies. It has convenient purchasing tools for customers who can order their products online and pick them up from the shop.

We must tell you that Shopify is an extremely versatile POS system for startups with its Starter POS plan. You can use this software to track customer data from multiple sales channels and send personalized offers to boost your sales.

Standout Features:

• Free trial requires no credit card
• Inventory synchronization
• Good for omnichannel businesses
• Marketing tools
• Customer relationship management
• Shipping insurance 

Pros vs Cons:

Subscription Cost:

While you can use the free trial version for 14 days, the cost of the Shopify POS system is quite high. The POS software starts from $39 a month while the hardware can cost up to $500.

4. Lightspeed: Best POS for Inventory Management

Often considered the leading POS system for small business owners, Lightspeed is perfect for retail businesses just like Shopify. But the difference is that it is built specifically with a focus on inventory management for online and offline sales. Lightspeed can be used to sell your products on online platforms such as Amazon, Walmart, and eBay. 

This system of point of sale for small business owners helps them to be in touch with their customers’ shopping preferences with the help of its sales analytics feature. The data of your customer stays secure as Lightspeed is EMV (Europay, Mastercard, and Visa) compatible. Automated recurring payments help this POS system stand out in the market.

Standout Features:

• Inventory management
• Standalone point of sale
• Dedicated account manager
• Hardware integration
• Sales reporting
• Product bundle available

Pros vs Cons:

Subscription Cost:

You get a free trial period of 14 days for the basic plan of Lightspeed POS which costs around $89 per month. 

5. Clover: Best POS for Integrations

The Clover POS system for small business owners is easy to use and contains a ton of features that cater to a variety of business types. The integration capability of Clover makes it a popular choice among business owners. You can choose from hundreds of apps that are available in the market that can work with this point of sale system.

We liked that this online POS system has a mobile-friendly design and can withstand high-volume sales with ease. The versatile payment options - mobile payment, cash, and credit cards - make this a highly sought-after POS system in the small business market.

Standout Features:

• Versatile point of sale system
• Employee management tools
• Invoice management
• Barcode scanning
• Order tracking
• Real-time reporting

Pros vs Cons:

Subscription Cost:

The free version of Clover POS has limited features, while the standard monthly plan starts at $49.

6. Zettle by PayPal: Best POS for Microbusinesses

Zettle - also known as PayPal Zettle - integrates the PayPal payment mode for selling products both in-store and online. It is an affordable POS system for business owners who only require the basic features for running their company. It consists of all the features that a startup needs, such as inventory tracking, sales completion, customer management, and sales reports.

The processing rates are low since this POS system is tied up to PayPal and it is ideal for in-person sellers because it has limited e-commerce facilities. You can use Venmo and QR code payments which is an additional plus.

Standout Features:

• Easy to use
• Integration with e-commerce platforms
• Low hardware cost
• Daily performance reports
• User-friendly interface
• Ease of integration

Pros vs Cons:

Subscription Cost:

The POS system is mostly free to use, with transaction fees of 1.75%. The hardware price varies according to your requirements.

7. SparkOn: Perfect POS for Local Businesses

SpotOn ranks among the premier POS systems for startups, offering adaptable hardware solutions ranging from compact handheld devices to robust full-sized terminals. Its true distinction lies in its suite of integrated marketing features—email campaigns, customer review management, and loyalty programs—all designed to drive customer engagement and foster retention. Notably, its offline payment processing functionality ensures continuous operation, enabling businesses to handle transactions without internet connectivity, with automatic syncing once reconnected.

Cost-effectiveness is another reason SpotOn stands out for emerging businesses. The entry-level Quick Start plan is available without upfront costs, subject to transaction fees. While more advanced features, like inventory oversight and employee scheduling, are bundled into higher-tier plans. With round-the-clock customer support and detailed reporting tools, SpotOn scales effortlessly with your growing business making it one of the best POS systems for small businesses.

Standout Features:

• Cloud Platform
• Cellular Backup
• Multi-Unit Management
• Guest Data Collection
• Curated Reports

Pros vs Cons:

Subscription Cost:

SpotOn’s Quick Start plan comes at no monthly cost, with a processing fee of 2.89% + $0.25 per transaction. The cost of hardware varies, based on the configuration and additional features selected to suit your business needs.

Advantages of Using Small Business POS System

There are several benefits of POS system to a small business owner. We have jotted down some of these for you to browse through.

Enhanced Customer Experience

A good point of sale system makes sure your customers receive a better, more intriguing user experience than your competitors. Customer satisfaction is one of the primary goals of any business.

Quick Payments

A POS system can assist in quick payment of your services. The system helps users to calculate the price and send the invoice directly via e-mail or to the printer.

Scalability

The right POS system can help you scale your business. If you use an inferior POS system, chances are that your company may not be able to grow.

Mobile Payment Options

Contactless payment options are being chosen by more and more customers all over the world today and your business should also be able to provide this by using a POS system.

Financial Accuracy

A POS system can help in the automatic tracking of sales and can even calculate the data. This helps you understand your financial situation with zero chances of human errors.

Sales Reporting

Creating custom reports manually can take a lot of time. Using a POS system can decrease this type and also help in creating automatic reports by considering the various facets of your operations.

Inventory Optimisation

A good POS system enables you to keep track of your stock in the store. You can manage the inventory quite easily using a POS system.

Cost Effective

Using a point of sale system can greatly reduce the cost of operating your business. You just need to find an inexpensive POS system that aligns with your business goals.

Time-saving

Manual labor takes much time to track sales, manage inventory, and generate reports. A POS system takes a fraction of this time to streamline your business operations.

Higher Efficiency

Once you start using a POS system, you will notice an increased efficiency of your small business compared to your previous system. You can make informed decisions in quick time.

Brand Enhancement

Customers tend to have a positive attitude towards brands who use a POS system. The waiting time to buy a product is reduced, and purchasing time is fast, leading to heightened customer satisfaction.

What to Look for in a Leading Point of Sale Software for Small Businesses?

By this time, you must have a clearer picture that’ll help you choose the best POS system for your business. However, you also need to know what features of the POS system your business requires. Here’s a breakdown of the essential features to look for when choosing the best POS systems for small businesses.

• Multiple Payment Options - Your chosen POS system should have more than one payment option such as credit cards, NFC (near field communication), and bank transfers.
• Sales Analytic - The POS system should be able to generate detailed reports on your sales and should also be able to predict customer behavior.
• Inventory Management - This essential feature of a POS system allows you to track your inventory, manage stock, and gauge the sale patterns of your products.
• User-friendly Interface - The POS system your company uses should have a user-friendly interface that your workers can easily use to enhance productivity.
• Multi-location Support - If you have plans to scale your business, make sure that your POS system can handle operations in multiple locations to maintain consistency.
• Customer Management - Your POS system must consist of customer management tools to help you understand customer preferences and offer them targeted services. 
• Integration with E-commerce - If your business has an online store, make sure your POS system can integrate with it. This will enable customers to have a seamless shopping experience.
• Staff Management - The POS system that you use should have employee management tools to track their working hours, and grant them extra allowance based on their performance.

Steps to Select the Best POS Software for Your Small Business

Here are some of the necessary steps you must take to pave your way to selecting and finally deploying a POS system for small business:

Conduct Market Research

The first step to choosing a POS system is to conduct a thorough research of the various types of POS systems for small businesses available in the market. Use online guides, read user reviews on third-party sites, and identify the best systems for you.

Estimate Your Requirements

Assess what functions you need for your business. Do you need to track sales, maintain customer loyalty, or manage online stores? Evaluate your needs before you embark on the  POS system selection route.

Fix a Budget

Consider how much money you are willing to spend on maintaining the POS system. Think of the subscription fees and additional feature costs.

Check Software Features

Find out what features you require, such as inventory management, mobile access, and sales inventory. Choose a POS system that has all the features.

Evaluate Hardware Needs

You can choose from mobile, desktop, or cloud POS systems. Accordingly, your hardware will differ. Make sure you have the hardware or you have the budget to buy new hardware.

Option for Scalability

Pick a POS system that can expand your business. Some features to look out for in this regard are e-commerce integration capability and multi-location support.

Robust Security

Ensure that the POS system you choose has high-security features to prevent the leakage of sensitive customer or payment information.

Free Trials

Many POS systems offer free trials before you buy subscriptions. You can test them in your business and find out if they can help your business run smoothly.

How Much Does a POS System Cost?

The cost of a POS system for small business depends on multiple factors. Some of them offer free trials for a limited time while others are highly expensive as they provide many additional tools for streamlining business operations. You should research the cost of various POS systems before making the final decision. While the average business POS system costs can range from $0 with free trial to $500 with premium service, each depends on the individual service provider. 

Wrapping Up

Our answer to the question: What is a POS system and the list of advantages must’ve given you anidea of how a good POS system can greatly help your business grow and reach new customers in no time. Therefore, only selecting the best-suited tool that can be customized as per your company goals can help you scale.

We have provided a list of the best POS systems for small business that you can harness to fuel growth. Choosing the right POS system is the key to maximizing the efficiency of your business, so make sure to make an intelligent choice!